As a small business owner you may be a target for scammers. According to Action Fraud 1 in 4 small businesses are targeted every year.  Here are some of the common types of scams that businesses have encountered:

Government grants in return for an advance fee

In this type of fraud bogus companies set up websites claiming to operate on behalf of the UK Government and their grant schemes.  The company will notify the applicant that they have been successfully accepted for a grant but tell them that in order for them to receive the grant they will need to set up a pre-paid card and deposit a sum of money as a  contribution to the grant.  The grant fund does not exist, and the grant is never awarded, and the applicant finds themselves out of pocket.  Business owners will never be asked to pay money into an account to receive a real Government grant.  Information of what grants are available can be searched for free on the government grant search tool. 

Invoice Fraud

Fraudulent companies can easily find out what suppliers a business uses and will use this information to send out fake invoices or call finance departments requesting payment for goods and services that a business never ordered or received. 

HMRC phishing emails and texts

These emails and texts are sent out randomly purporting to be from HMRC and informing the business owner that they are due a tax refund are very common.  They are designed to get the business owner to supply their personal bank details. 

There have even been reports of bogus callers at businesses or homes offering free tax advice where the individual tries to extract personal or bank details. 

Companies House Late Filing Calls

Bogus callers will ask Limited Companies for a fee in order to stop them from being liable for any further fines owing to the late filing of annual returns. Companies House never make calls demanding payment.  

Loan Fee Fraud

This type of scam is when the victim is contacted and asked to pay a fee for a business loan application that they have made.  Of course if they haven’t applied for a loan then they won’t fall victim to this scheme but the fraudster works on the basis that some of the people he or she calls will recently have applied for a business loan and they will trick their victims into disclosing the name of the loan scheme that they have just applied for and will then be told that there is a fee for setting up that loan. These scams are ultimately aimed at taking the victims money or their identity.

Directory Scams

Phone scams offering a business a prominent place in a local or national business directory for a fee are prevalent.  The business owner is just required to pay a couple of hundred pounds over the phone.  Of course there is no such directory and the bogus caller has taken money and bank details from the business.

Request for payment for unnecessary services

Start-ups and small businesses are often confused and overwhelmed when it comes to keeping up with insurances and licenses that they are required to purchase. Bogus calls, emails and texts will often target businesses and prey on their confusion.

Small businesses can check with their local authority or their trade body directly or their professional business advisor to find out what is required to be fully compliant. 

Business Identity Theft

This is where a business’s identity is stolen or cloned and can also include their website being hacked.  Transactions are then made in that businesses name.  If you think about the amount of information that can be found on the internet it is not hard to see how a business could have their identity stolen. 

So how can you protect your business against scams?

• Know who your customers really are including your suppliers. Remember to carry out enquiries or credit checks before offering credit or taking on a large contract with someone you don’t know very well.
• Install updates as soon as they become available on pc’s, tablet or smartphones as these updates often include important security updates that will protect against viruses and cybercrime.
• Remember that email sent from addresses can easily be spoofed and if something sounds too good to be true it usually is. Businesses should look out for emails sent to ‘Dear Customer’ or a similar generic greeting as usually if the email is genuine it will be personalised.  If the email asks for bank or personal details and the recipient isn’t expecting it, they should treat it with caution.
  
  
• Never pay over the phone by bank transfer. By adopting this simple rule, businesses can protect themselves against many of the current scams out there. And if the request for payment is genuine there will be other ways in which to make the payment.

• Review what information about the business is publically available and decide if it really needs to be in the public domain. Businesses should review their own website content and think about what it might be giving away to potential fraudsters.

Communicating with your employees is vital

As a small business owner/manager it is vital that you share information on scams with your employees as you won’t always be the one picking up the phone, opening the post or the emails sent to your business.  Scammers also target during the summer holidays when small businesses might have their resources stretched owing to the school holiday period. If a business uses temporary staff during this period, owners must ensure that they are briefed on the most common types of scams which include:

• Repeat Business

Some of the most elaborate scams around are based on repeat business.  A business receives a bogus call or email asking the victim to place a repeat advertisement with them and sends a mock-up of the previous advertisement to make the claim more believable.  A time-strapped business owner or a new employee can very easily fall victim to such a scam and make a payment to a company that doesn’t exist.

• Mandate Fraud

This is where the business is asked to make small changes to their direct debit mandate which of course doesn’t exist in the first instance.

These simple steps can reduce the odds of falling victim to scams:

Small business owners can sign up to receive alerts from organisations such as Action Fraud Alert

Limited companies can sign up for protection under the PROOF scheme from Companies House.

If a small business owner suspects that they are a victim of a scam they should not hesitate in reporting it to Action Fraud